5. You are a fixed income trader at Goldman Sachs. You purchase $1,000,000 in face value of a bond with aprice of 102.50 and accrued interest (per 100 face) of 0.75 from a customer. The bond has a modifiedduration of 3.75. Goldman owns $25,000,000 in face value of the most recently issued 5 year Treasury noteon its balance sheet. It has a modified duration of 4.5, a price of 101.75 and accrued interest (per 100 face)of 0.30. Calculate the amount of face value of that Treasury security you need to sell to hedge the interestrate risk of the bond you just purchased. Round to the nearest thousand since bond trade in 1000 facevalue increments.$1,000,000$843,000$833,000$1,186,000

The amount of face value of the Treasury security to be sold to hedge the interest rate risk of the…

Answered: 5. You are a fixed income trader at…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Bank A issues a bond with a maturity of 3 years, par value of $1,000,000, and annual coupon rate of 2%. Company B buys this bond at date 0. 1. in this situation, who lends money and who borrows money? 2. what are the cash flows received by B if it decides to hold the bond until maturity?
In 1994, you purchased a, $1,000 corporate bond issued by Boeing. At the time, the interest rate for the bond was 9.50 percent. Today, comparable bonds are paying 5.25 percent. What is the approximate dollar price for which you could sell your Boeing bond?
You are offered an 6 year bond issued by Fordson, at a price of $943.22. The bond has a coupon rate of 9% and pays the coupon semiannually. Similar bonds in the market will yield 10% today. Do you buy the bonds at the offered price? Yes the bond is offered at a premium. O No, the bond offered is worth less than $943.22. Yes, the bond offered is being sold at a discount. O There is not enough information to determine.
Please give me answer very fast in 5 min saur
Five years ago, you purchased a $1,000 par value corporate bond with an interest rate of 5 percent. Today, comparable bonds are paying 7 percent. What is the approximate dollar price for which you could sell your bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) D Approximate market value.
5. Compute the price of $86,708,402 received for the bonds by using the Present value at compound interest, and Present value of an annuity. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount 29,058,178 X Present value of the semi-annual interest payments 57,650,184 X Proceeds of bond issue 86,708,402
5. Grohl Co. issued 8-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual payments. If the YTM on these bonds is 11 percent, what is the current bond price? a) $1,531.43 b) $1,010.00 c) $718.96 d) $1,005.00 e) $1,000.00
Kk.428.
1.ABC Company offers to sell you a bond for $613.91. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?a. 6.71%b. 5.91%c. 5.59%d. 5.00%2.At a rate of 8%, what is the present value of the following cash flow stream? $0 at now; $100 at the end of Year 1; $300 at the end of Year 2; $0 at the end of Year 3; and $500 at the end of Year 4.a.$ 717.31b.$788.32c. $625.54d. $701.153. ABC company has received a $50,000 loan from a bank. The annual payments are $6,202.70. If the company is paying 9% interest per year, how many loan payments must the company make?a. 12b. 19c. 15d. 134. ABC Company has 100,000 unit of common stock outstanding, its net income is $750,000, and its P/E ratio is 8. What is the company’s stock price?a. $40.00b. $20.00c. $60.00d. $30.005. ABC company 2005 sales were $100 million. If sales grow at 8% per year, how much would it be in…
(Bond valuation relationships) A bond of Visador Corporation pays $70 in annual interest, with a $1,000 par value. The bonds mature in 18 years. The market's required yield to maturity on a comparable-risk bond is 8.5 percent. a. Calculate the value of the bond. b. How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 12 percent or (ii) decreases to 4 percent? c. Interpret your finding in parts a and b. Question content area bottom Part 1 a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 8.5 percent? $enter your response here (Round to the nearest cent.)

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